Severance (All Registrants)

The Registrants have an ongoing severance plan under which, in general, the longer an employee worked prior to termination the greater the amount of severance benefits. The Registrants record a liability and expense or regulatory asset for severance once terminations are probable of occurrence and the related severance benefits can be reasonably estimated. For severance benefits that are incremental to its ongoing severance plan (“one-time termination benefits”), the Registrants measure the obligation and record the expense at fair value at the communication date if there are no future service requirements, or, if future service is required to receive the termination benefit, ratably over the required service period.

Ongoing Severance Plans

The Registrants provide severance and health and welfare benefits under Exelon’s ongoing severance benefit plans to terminated employees in the normal course of business. These benefits are accrued for when the benefits are considered probable and can be reasonably estimated.

Exelon and Generation recorded $2 million and $20 million of severance costs associated with these ongoing severance benefits for the three months ended March 31, 2016 and 2015, respectively, within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income. For Generation, the amount includes $1 million for amounts billed by BSC through intercompany allocations for the three months ended March 31, 2016.

Cost Management Program-Related Severance

In August 2015, Exelon announced a cost management program focused on cost savings at BSC and Generation, including the elimination of approximately 500 positions. These actions are in response to the continuing economic challenges confronting all parts of Exelon’s business and industry, necessitating continued focus on cost management through enhanced efficiency and productivity. Exelon expects that approximately 250 corporate support positions in BSC and approximately 250 positions located throughout Generation will be eliminated.

Upon Senior Management approval of the cost management targets and initiatives in the first quarter of 2016, Exelon recorded severance benefit costs of $17 million associated with the anticipated position reductions. The final amount of the charge will ultimately depend on the specific employees severed.

For the three months ended March 31, 2016, the Registrants recorded the following severance costs related to the cost management program within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income, pursuant to the authoritative guidance for ongoing severance plans:



	Exelon		Generation		ComEd		PECO		BGE
Severance benefits^(a)	$	17	$	12	$	3	$	1	$	1

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(a)	The amounts above for Generation, ComEd, PECO and BGE include $7 million, $3 million, $1 million, and $1 million, respectively, for amounts billed by BSC through intercompany allocations for the three months ended March 31, 2016.

Severance Costs Related to the PHI Merger

Upon closing the PHI Merger, Exelon recorded a severance accrual for the anticipated employee position reductions as a result of the post-merger integration.

For the three months ended March 31, 2016, the Registrants recorded the following severance costs associated with the identified job reductions within Operating and maintenance expense in their Consolidated Statements of Operations and Comprehensive Income, pursuant to the authoritative guidance for ongoing severance plans:



											Successor
	Exelon		Generation		ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Severance benefits^(a)	$	52	$	10	$	2	$	1	$	1	$	37	$	18	$	11	$	8

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(a)	The amounts above for Generation, ComEd, PECO, BGE, Pepco, DPL and ACE include $9 million, $2 million, $1 million, $1 million, $18 million, $11 million and $8 million, respectively, for amounts billed by BSC and/or PHISCO through intercompany allocations for the three months ended March 31, 2016.

Cash payments under the plan begin in May 2016 and will continue through 2020.

Severance Liability

Amounts included in the table below represent the severance liability recorded for employees of each Registrant and exclude amounts included at Exelon and billed through intercompany allocations:



													Successor
Severance Liability	Exelon			Generation			ComEd		PECO		BGE		PHI		Pepco		DPL		ACE
Balance at December 31, 2015	$	35		$	23		$	3	$	—	$	1	$	—	$	—	$	—	$	—
Severance charges^(a)(b)	71			7			—		—		—		51		—		—		—
Payments	(4		)	(3		)	—		—		—		—		—		—		—
Balance at March 31, 2016	$	102		$	27		$	3	$	—	$	1	$	51	$	—	$	—	$	—

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(a)	Includes salary continuance and health and welfare severance benefits. Amounts primarily represent benefits provided for the PHI post-merger integration and the cost management program.


(b)	Represents activity from March 24, 2016 to March 31, 2016 for PHI, Pepco, DPL and ACE.